By regulatory hook or by crook, most investors caught up in the Arch Cru scam will now get something resembling fair compensation for the losses they have suffered since early 2009 when their money in the group’s funds was suddenly frozen.

Yet no one should be under the illusion that the fallout from this debacle has been handled satisfactorily by the Financial Services Authority. It hasn’t – and I’m not alone in being critical.

MPs who have taken up the cudgels on behalf of investors – the likes of Conservatives Alun Cairns and Guy Opperman – are also perplexed as to how the regulator has gone about cobbling together an adequate compensation package and clearing up the detritus.

FSA: The Arch Cru debacle has been an regulatory fiasco from start to finish, says Jeff Prestridge

Some of the guilty parties have paid a heavy price. Others have got off lightly.

Independent
financial advisers have received the biggest regulatory kicking.
Although a few advisers grossly mis-sold the Arch Cru funds, others were
as much hoodwinked by the misleading marketing literature as were
investors. They do not deserve to be drummed out of business because of
fund management failure at Arch Cru.

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Last
week the regulator insisted it was the duty of advisers to look under
the bonnet of all investment funds before recommending them.

It
also said advisers should not rely on fund categorisations by
organisations such as the Investment Management Association (Arch Cru
funds were labelled as ‘cautious managed’) and they should not be afraid
to challenge them.

Such
responsibilities should not be foisted on advisers. It should be the
duty of the regulator and fund custodians to ensure investment funds
are run in accordance with their stated objectives and that investors’
savings are safeguarded.

Equally,
if the fund industry’s trade organisation does not give sufficient
resources or expertise to categorising funds correctly, it should pass
the responsibility to someone who can.

Sadly, many honest financial advisers will go out of business as a result of Arch Cru. That cannot be right.

Also,
many a bad adviser will urvive because they ‘phoenixed’ their
businesses (closed them down and then set up new ones), dumping all
responsibility for Arch Cru on the Financial Services Compensation
Scheme. That is an outrage.

The Arch Cru debacle has been an almighty regulatory fiasco from start to finish.